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Web gambling case could be far-reaching
By Chris Jenkins
USA TODAY
Can a law passed when computers took up entire rooms keep an
Antigua-based Web site from accepting bets from U.S. citizens? Jay
Cohen says no.
In March, the U.S. government charged Cohen and 20 other Internet
gambling site operators with violating the 1961 Wire Communications Act,
which made placing or taking bets over phone lines illegal.
Cohen is the first to contest the charges, in a trial that started Feb. 14 in
New York. The other 20 defendants, all U.S. citizens operating outside
the country, have since pleaded guilty or remain fugitives -- including Steve
Schillinger and Haden Ware, Cohen's partners in the site
(www.wsex.com). A conviction carries a maximum sentence of five years
and a fine up to $250,000.
''Jay strongly believes that he did not commit a crime, that he ran this
company in a completely legitimate manner,'' says Benjamin Brafman,
Cohen's lawyer. ''He feels confident that, if given an opportunity to have
his day in court, that a jury will find him not guilty.''
The fact that Internet gambling is legal in Antigua is a major part of
Cohen's defense, which Brafman expects to begin presenting after the
prosecution rests today.
''As far as we're concerned, all bets are placed here on our server here in
Antigua, which is a sovereign state and we're fully licensed,'' said Simon
Noble of www.intertops.com, another Antigua-based gambling site.
But the U.S. government doesn't draw a distinction between making a bet
on the Internet and calling a bookie, and the law might be on their side.
''It may not make a difference whether the server was located in Antigua,
because the federal anti-gambling law in question applies broadly,'' said
Jim Halpert, a Washington, D.C., lawyer familiar with Internet law.
''Typically, the fact that a site is doing business with consumers in a
jurisdiction is sufficient to establish jurisdiction in the state where the
consumer is located.''
The trial is expected to go to the jury later this week. The assistant U.S.
attorneys prosecuting the case weren't available for comment, but U.S.
Attorney General Janet Reno has been quoted as saying a conviction
would help establish that the Web is not an ''electronic sanctuary'' from
U.S. laws.
The decision will raise other questions. For example, can a foreign-based
site sell a non-FDA-approved drug to a U.S. customer?
''This case is an important test of whether U.S. criminal laws apply to Web
sites outside the United States, and it will establish a precedent that will be
watched closely outside the gambling arena,'' Halpert said.
Still, a conviction probably won't squelch the estimated 800-plus sites
currently taking bets.
''We are operating on a global basis in a global market, so what happens
in . . . New York is unlikely to impact on a customer placing a wager in
Malaysia,'' Noble said.
By Chris Jenkins
USA TODAY
Can a law passed when computers took up entire rooms keep an
Antigua-based Web site from accepting bets from U.S. citizens? Jay
Cohen says no.
In March, the U.S. government charged Cohen and 20 other Internet
gambling site operators with violating the 1961 Wire Communications Act,
which made placing or taking bets over phone lines illegal.
Cohen is the first to contest the charges, in a trial that started Feb. 14 in
New York. The other 20 defendants, all U.S. citizens operating outside
the country, have since pleaded guilty or remain fugitives -- including Steve
Schillinger and Haden Ware, Cohen's partners in the site
(www.wsex.com). A conviction carries a maximum sentence of five years
and a fine up to $250,000.
''Jay strongly believes that he did not commit a crime, that he ran this
company in a completely legitimate manner,'' says Benjamin Brafman,
Cohen's lawyer. ''He feels confident that, if given an opportunity to have
his day in court, that a jury will find him not guilty.''
The fact that Internet gambling is legal in Antigua is a major part of
Cohen's defense, which Brafman expects to begin presenting after the
prosecution rests today.
''As far as we're concerned, all bets are placed here on our server here in
Antigua, which is a sovereign state and we're fully licensed,'' said Simon
Noble of www.intertops.com, another Antigua-based gambling site.
But the U.S. government doesn't draw a distinction between making a bet
on the Internet and calling a bookie, and the law might be on their side.
''It may not make a difference whether the server was located in Antigua,
because the federal anti-gambling law in question applies broadly,'' said
Jim Halpert, a Washington, D.C., lawyer familiar with Internet law.
''Typically, the fact that a site is doing business with consumers in a
jurisdiction is sufficient to establish jurisdiction in the state where the
consumer is located.''
The trial is expected to go to the jury later this week. The assistant U.S.
attorneys prosecuting the case weren't available for comment, but U.S.
Attorney General Janet Reno has been quoted as saying a conviction
would help establish that the Web is not an ''electronic sanctuary'' from
U.S. laws.
The decision will raise other questions. For example, can a foreign-based
site sell a non-FDA-approved drug to a U.S. customer?
''This case is an important test of whether U.S. criminal laws apply to Web
sites outside the United States, and it will establish a precedent that will be
watched closely outside the gambling arena,'' Halpert said.
Still, a conviction probably won't squelch the estimated 800-plus sites
currently taking bets.
''We are operating on a global basis in a global market, so what happens
in . . . New York is unlikely to impact on a customer placing a wager in
Malaysia,'' Noble said.